Why did USA fall behind China in cell phone production

Why did USA fall behind China in cell phone production

Made in China is a phrase seen almost on everything these days; however, Made in USA is rarely seen on anything. If we turn the pages of history, it comes to our knowledge that during 60s, US was a global leader in consumer manufacturing. In 70s and 80s China, Japan and some other Asian countries started running the race of manufacturing till 2010, when China left USA far behind in this race. In 1990s, China’s share in global manufacturing output was 3.5%, which reached 30% in 2021. However, America’s share at that time was 16.8%, which was far less than that of China.

During past few years, President Trump and then President Joe Biden have been seen chanting slogan of Made in USA signalling the shift of trend. Global supply chain issues have forced many of the Americans to reopen the factories which remained non-functional for a long period of time. Makers of semiconductors and EV batteries are even convinced to install new setups and factories, however, large tech companies like Apple and Alphabet are not ready to take risk as their manufacturing is done outside the USA. These companies hire thousands of engineers annually who are only there to monitor the manufacturing being done at Apple company in Shanghai.

However, considering the trade tension between China and USA, Apple started its manufacturing in rather a safe hideout, India. Though Apple already manufactures iPhone in Malaysia, Thailand and South Korea, but it is predicted that by 2025 all the iPhone will be made in India. When asked about bringing back the production of iPhone in USA, the CEO of Apple company answered by saying that China is a hub to get a large number of trained and skilled labours which is very difficult to be found in USA.

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As China has large population and it produces thousands of science and technology graduates every year. When these graduates start working in the tech companies a large number of labour at low cost is available. Second reason for China to lead the manufacturing is that there is no supply chain issues as everything from chips to software, is made in China. On the other hand, the cost of skilled labour is far too high in USA.

One of the examples is buying of Motorola by Google in 2012, which due to high domestic cost was shut down in the same year and was later sold to Lenovo. According to experts, failure of Motorola indicates the shortage of skilled labour in USA. Hence, phone manufacturing is not cost effective in USA.

It is believed that currently China is leading phone manufacturing sector because of its low cost and high number of skilled labours.

Recently, some companies such as Purism have initiated phone manufacturing in USA. In order to flourish in this particular sector USA has to invest millions of dollars in training the human forces to make them skillful and has to work on the production of all the phone parts within USA to cope up with the supply chain issue.

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